Monday turned out to be a fabulous day of trade for Indian equity benchmarks, with frontline gauges recouping previous sessions’ losses and ending above their crucial 10,500 (Nifty) and 34,300 (Sensex) levels, as traders opted to buy beaten down but fundamentally strong stocks after recent sell-off. Key gauges made a gap-up opening and traded jubilantly throughout the session on Reserve Bank of India (RBI) Governor Urjit Patel’s statement that stock market bubble will not cause any major problem. He also said transmission of RBI decisions by banks have improved now, partly aided by demonetization. Some support also came with Finance minister Arun Jaitley expressing confidence over comfortable revenue collection in 2018-19, seeking to remove doubts about any likely slippage in fiscal deficit from the revised target of 3.3% of GDP ahead of the general elections in 2019. Adding to the optimism, the government’s revenue collection continued to register a steady growth in the April-January period, on the back of healthy growth in corporate tax collections. The net direct tax collections up to January, 2018 stood at Rs 6.95 lakh crore, registering a growth of 19.3% higher than the net collections for the corresponding period of last year. The collection indicated that 69.2% of the Revised Estimates of Direct Taxes for FY 2017-18 (Rs 10.05 lakh crore) has been achieved.

Traders also took some encouragement with report that India’s external debt has remained within manageable limits as indicated by the external debt indicators, and the country is not among the world’s top debtors. India’s external debt stock stood at $495.7 billion at quarter ending September 2017. Traders also drew some support with private report that retail inflation is expected to moderate and print at 5% after rising consecutively for five months, helped largely by seasonal dip in vegetable prices, while trade deficit is also likely to improve, in January.

Firm opening in European markets too aided sentiments, as jitters over a sudden spike in volatility that wiped off $1 trillion in market capitalization last week appeared to ease. Asian markets ended mostly in green after US lawmakers managed to end a brief government shutdown with a bill raising spending caps and funding the government until March 23. China will boost its job creation effort and promote entrepreneurship this year, under pressure to find work for millions of unemployed people and new college graduates.

Back home, stocks related to banking space edged higher on report that gross non-performing assets (NPAs) of banks declined marginally to 9.8% at the end of September 30, 2017 from 10% as on June 30, 2017. Infrastructure related stocks too remained in focus on report that the Centre has released nearly Rs 9,940 crore to the states so far for the Smart Cities Mission, with Maharashtra accounting for the highest amount of Rs 1,378 crore, followed by Madhya Pradesh getting Rs 984 crore. Realty stocks firmed up after a survey by private poll highlighted that with the real estate market beginning to adjust to various reforms like Demonetization, GST and RERA, most Indian metros witnessed recovery with sales improving, while property prices corrected or maintained status-quo. Select sugar stocks remained in sweet spot after sugar prices jumped by Rs 1/kg to Rs 30.50/kg immediately after the Central government capped sales by mills for the next two months starting Thursday.

FII’s Activity 12th-Feb-18

The FIIs as per Monday’s data were net sellers in equity segment, while they were net buyers in debt segment, according to data released by the NSDL.

In equity segment, the gross buying was of Rs 3646.82 crore against gross selling of Rs 5040.52 crore. Thus, FIIs stood as net sellers of Rs 1393.70 crore in equities.

In the debt segment, the gross purchase was of Rs 508.13 crore with gross sales of Rs 412.06 crore. Thus, FIIs stood as net buyers of Rs 96.07 crore in debt.

In the hybrid segment, the gross buying was of Rs 0.05 crore against gross selling of Rs 1.05 crore. Thus, FIIs stood as net seller of Rs 1.00 crore in hybrid segment.

Now what to expect ??

Nifty Levels

Resistance at 10600 break and sustain above 10600 will take it to 10750---10820 mark

Support intact at 10300

Trade with levels only

Bank Nifty

Resistance at 25760 break and sustain above 25760 will take it to 26000---26250.

Support intact at 25300

Trade with levels only

Daily Derivative Outlook 14th February 2018

•Nifty (February) futures closed at a Premium of 3.35 points versus a Premium of 14.75.

•NESTLEIND (35%), HEXAWARE (18%), BPCL (17%), BANKBARODA (15%) and REPCOHOME (12%) were the top gainers in terms of open interest.

•BREGEPAINT (-8%), CANFINHOME (-8%), DIVISLAB (-6%), CHOLAFIN (-6%) and SUNTV (-5%) were the top losers in terms of open interest.

•Maximum call buying was seen at Nifty 10400 strike and maximum put writing was seen at Nifty 10500 strikes.